ANKENY, Iowa -- In a “challenging year” of lower customer traffic and same-store sales, Casey’s General Stores Inc. saw some bright spots in the fuel business.
In an earnings call for its fiscal fourth quarter ending April 30, 2017, Casey’s CEO Terry Handley described the chain as “an industry leader” in terms of fuel-gallon growth, among other metrics. In fact, total fuel gallons for fiscal 2017 rose 5.6% to hit 2.1 billion.
Here are three additional fuel highlights from Casey’s fiscal-fourth-quarter earnings call (click here for more details) ...
1. Fuel volumes
For the fiscal fourth quarter ending April 30, same-store gallons slipped 0.5%, which CFO Bill Walljasper partly credited to a negative comparison to the year prior, a leap year. The chain slightly beat its annual goal for same-store gallons growth in fiscal 2017, with a 2.1% increase.
Walljasper attributed some of the gallon growth to Casey’s ongoing partnership with the grocery chain Hy-Vee and the Fuel Saver fuel-loyalty program. In the program, Hy-Vee customers earn discounts on gasoline at Casey’s convenience stores by buying select items at Hy-Vee grocery stores. The c-store chain plans to expand the program beyond Hy-Vee, and it has a Fuel Saver card with other grocery stores in its Southern markets.
Casey’s total fuel sales grew 3% to hit $496.5 million during the fiscal fourth quarter, thanks in part to an average retail price of $2.22 per gallon vs. $1.81 in fiscal fourth-quarter 2016.
Its goal for fiscal 2018 is a 1% to 2% increase in same-store fuel-gallon sales.
2. Fuel margins
Casey’s average fuel margin in fiscal fourth-quarter 2017 was 17.2 cents per gallon (CPG), off from fiscal fourth-quarter 2016 because of lower volatility and wholesale costs, according to Walljasper.
The chain hit its same-store fuel-margin goal for fiscal 2017 right on the nose, or 18.4 CPG. Its guidance for fiscal 2018 is an average fuel margin of 18 to 20 CPG.
Total fuel gross-profit dollars in fiscal 2017 fell slightly to $378.3 million, weighed down by a 1.2-CPG decline in fuel margin vs. fiscal 2016.
The sale of renewable identification numbers (RINs), credits that obligated parties—refiners—buy from fuel blenders such as Casey’s to meet their volume obligations under the RFS, added nearly 1.4 CPG to the chain’s fuel margin in fourth-quarter 2017. Casey’s sold 15.5 million RINs during the quarter for about $7.1 million. The credits are currently trading between 70 and 75 cents, down from about 82 cents in first-quarter 2016.
In April, Casey’s announced it was adding E15, the 15% ethanol blend, and E85, an 85% ethanol blend, to 17 stores in Illinois, Iowa and Kansas, which will enable it to earn additional RINs.
Ankeny, Iowa-based Casey's General Stores owns and operates more than 1,950 convenience stores in 15 states.